Land Law

Question 1

Contracts Concerning Land (Formalities)

Answer 1

-Three conditions must be satisfied for the contract to be valid as per (LP(MP)A) S2

-Conditions: The contract must be in writing, it must contain all the expressly agreed terms (Either in the contract or another document; LP(MP)A 1989, S2(2)) & it must be signed by both parties (in one document or two identical documents; LP(MP)A 1989, S2(1)).

-Normal contract law regulations still apply

-For both commercial and residential sale transactions there are Law Society standard conditions of sale, which are incorporated by reference into the majority of contracts for the sale of land

Question 2

Variations in Land Contracts

Answer 2

-Key Case: McCausland v Duncan Lawrie Ltd

-The parties tried to orally agree a variation to the agreed completion date in the sale contract. This variation was held to be void

-Whenever a material term in a land contract is varied, that variation must also comply with LP(MP)A S2

-The court did not define what is a ‘material’ term. But where a term, ex. completion date, is essential to the contract then it will be considered ‘material’.

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Question 3

Estate Contract (passing equitable interest in land)

Answer 3

-Key Case: Walsh v Lonsdale

-A land contract was given proprietary status in this case based on the equitable maxim that “equity regards as done that which ought to be done

-Here, the landlord and tenant entered into a contract for a 7 year lease. The tenant took possession of the property. The parties failed to execute a deed to actually create the legal lease

-The court recognised an equitable lease because of the existence of the contract and the availability of specific performance as a remedy

-This case makes clear that a contract to create or transfer a legal property right will create a proprietary right in equity if the remedy of specific performance is available

Question 4

Types of Land Contracts

Answer 4

-These contracts create a contractual right to a legal estate

-Sale Contract: As part of conveyancing, the buyer and seller may choose to enter into a sale contract to record the terms of the agreement and to commit themselves legally to complete the sale

-Contract for Lease: Prior to the grant of a lease, the landlord and tenant may choose to enter into a contract to commit themselves to enter into the lease in the future. This is common in practice where the premises are not ready for immediate occupation, but the parties want the certainty that a lease will be entered into

-Option Agreement

-Right of Pre-Emption

Question 5

Equitable Interests in Land Contracts

Answer 5

-A land contract may be created deliberately, or it may be that the parties try to create a valid deed but fail

-The courts will recognise an equitable interest in the land providing: There is a document that complies with S2 LP(MP)A 1989 and the remedy of specific performance is available

Examples:

-A contract to: transfer a legal estate will create an estate contract
-A contract to: create a legal lease will create an equitable lease
-A contract to: create a legal mortgage will create an equitable mortgage
-A contract to: create a legal easement will create an equitable easement

-As a proprietary right in land, it can bind third parties (subsequent owners)

-To bind third parties, an estate contract must be protected. How this is done varies whether the land is registered or unregistered. Donees will always be bound.

Question 6

Remedies for Breach

Answer 6

-Damages: Common law remedy, available as of right. Usual measure is the loss suffered (e.g. legal & surveyor fees) - including loss of bargain

-Specific Performance: A court order compelling the defaulting party to carry out positive contractual obligations. Equitable remedy.

-Injuction: A court order restraining somebody from doing something, including selling the land on. Equitable remedy.

-Coatsworth v Johnson: A landlord and tenant entered into a contract for a lease of a farm. The tenant moved in. Lease was not completed by deed. Court would not recognise an equitable lease because the tenant has breached a term of the contract. Remedy of specific performance was not available. Tenant was not coming to court ‘with clean hands’.

Question 7

Enforcement

Answer 7

-One of the key features of a proprietary right is that it is capable of being enforced against a third party

-If the burdened land is registered, whether the proprietary right will in fact be enforceable is determined by applying the enforcement rules under the LA 2002. These rules are also the law behind ‘title investigation’

Question 8

Land Registration Act 2002 (LRA 2002)

Answer 8

-The LA 2002 places all estates and interests in land into one of three categories and explains what must be done in terms of registration to make those estates and interests binding on new owners of servient land

-The categories interact with S28 & S29 to determine whether an estate or interest will be binding on new owners of servient land

-The three categories are: Registrable Dispositions, Interests Protected By Entry & Overriding Interests

-Basic Rule of Priority: An interest of whatever kind will take priority over later dispositions. S29 provides an important exception to this rule (operates in the majority of transactions affecting land): a disposition of a registered estate for valuable consideration.

Question 9

A disposition of a registered estate for valuable consideration

Answer 9

-A registrable disposition of a registered estate, made for valuable consideration, will take priority over any pre-existing rights in the land except those which have been protected on the register or those which are overriding interests

-This means S28 and the normal rule of priority is limited in scope to transactions not made for valuable consideration: where the new owner is a ‘donee’ meaning they have been gifted or have inherited the land

-Donees will take the land subject to all pre-existing interests, irrespective of whether they have been protected by registration

Question 10

Registrable Dispositions

Answer 10

-To achieve an accurate register of title, S27(2) states ‘registrable dispositions’ must be completed by registration. S27(1) states that the dispositions do not operate ‘at law’ until the registration has been completed. This is ‘compulsory registration’

-Some of the dispositions listed in S27(2) relate to legal estates. The transfer of an existing registered freehold or leasehold estate must be completed by registration (S27(2)(a)). So must a new lease for seven or more years (S27(2)(b))

-Granting an easement is a ‘registrable disposition’ (S27(2)(d)): Once the formalities of a deed have been met, the deed must be registered - it will not be legal until registered. The easement will then appear on the property register (dominant land) and in the charges register (burdened land). It will be a properly registered disposition and will bind a purchaser.

-Granting a mortgage (a legal charge) is a ‘registrable disposition’ (S27(2)(f)): As with express legal easements, the mortgage must be registered by deed. The mortgage will not be legal until it has been properly registered. Failure to do so has a huge impact on the lender’s powers to repossess and sell. Once registered it appears in the charges register.

-The grant of a landlord’s right of entry (right of forfeiture) is a ‘registrable disposition’ (S27(2)(e)): As with other legal interests, it must be registered by deed. It will not be legal until it has been properly
registered. A right of entry is a right to bring a legal estate/lease to an end. It is a very powerful right and seriously affects the tenant, so there is a high degree of formality to meet

Question 11

Registrable Dispositions

Answer 11

-To achieve an accurate register of title, S27(2) states ‘registrable dispositions’ must be completed by registration. S27(1) states that the dispositions do not operate ‘at law’ until the registration has been completed. This is ‘compulsory registration’

-Some of the dispositions listed in S27(2) relate to legal estates. The transfer of an existing registered freehold or leasehold estate must be completed by registration (S27(2)(a)). So must a new lease for seven or more years (S27(2)(b))

Question 12

Equitable Interests Protected By Entry

Answer 12

-An equitable interest in the land (e.g. an estate contract) can be validly created and exist without any registration requirement. BUT whether the equitable interest with be binding and enforceable against a third party purchaser will depend upon whether it has been protected by entry of a notice OR restriction

-All equitable interests (other than a beneficial interest in a trust of land) must be protected by the entry of a notice in the Charges Register of the burdened land (S32)

-A notice is the appropriate way to protect an interest which is intended to last beyond a change of ownership.
The most commonly encountered interests which cannot be protected by notice are beneficial interests in a trust of land (can be protected by a restriction), and short legal leases for a term of three years or less (binding as overriding interests)

-A notice must not be confused with the ‘doctrine of notice’ which is relevant only to unregistered land.
A notice is intended to bring the relevant equitable interest to the attention of a purchaser, notifying them that the interest will be binding upon future owners

-The entry of the notice does not guarantee that the interest has been properly created so as to be valid. It simply means that if the interest has been properly created, it will be binding

-Some interests must be protected by notice to be enforceable against a purchaser; others may be, but do not have to be. Ex. legal leases (more than three years, up to seven years) can, but do not have to be, protected by notice as they will still be binding as “overriding interests”

Question 13

What Is Protected By Entry Of A Notice? (S32)

Answer 13

-Restrictive Covenants Affecting Freehold Land

-Estate Contracts

-Equitable Easements

-Equitable Leases

-Legal Leases (More than 3 years & up to 7 years)

-NOT TRUST INTERESTS (S33)

Question 14

What Is Protected By Entry Of A Restriction? (S40)

Answer 14

-A restriction in the Proprietorship register is the appropriate way to protect an interest which is not intended to last indefinitely. It is a means by which conditions can be imposed on a purchaser: Only when the conditions have been fulfilled can, for example, the transfer of the freehold to a purchaser be registered

-The best example of use of a restriction is a beneficial interest in a trust of land. Here, a restriction might instruct a purchaser to pay the capital money to at least two trustees, so that a beneficiary’s interest is overreached and converted into an interest in the sale proceeds

-A restriction may also be entered where the registered proprietor of the land is bankrupt. In that situation, a trustee in bankruptcy may enter a restriction to the effect that no disposition of the land may be registered without the trustee in bankruptcy’s consent. This ensures that no sale can take place without the trustee’s knowledge, and the trustee’s consent can be granted with the condition they will be paid, not the bankrupt

-NOTE: Restrictions cannot prevent dispositions altogether, they simply impose conditions which must be fulfilled before the disposition can be registered

Question 15

Overriding Interests

Answer 15

-Overriding interests are interests which will bind a purchaser for value, whether a buyer or lender, even though they’re not protected by registration

-Main aim of land registration to ensure the register represents a complete record of all interests affecting any piece of land, enabling prospective purchasers to view the register and see exactly what interests exist

-Overriding interests defeat that aim and so their recognition has been contentious ever since they were introduced in the LA 1925. Law Commission did consider abolishing overriding interests altogether but recommended retaining them in limited form in LRA 2002

-Their continued existence means that inspections and enquiries which go beyond simply looking at the registers of title will still be needed. They can provide a safetv net of protection for those who are not able to, have not, or cannot reasonably be expected to take steps to protect their interests in land

Question 16

Types of Overriding Interests

Answer 16

-Where land is already registered, list is set out in Schedule 3 (LA 2002). If there is a ‘registrable disposition’ of the land, the new registered proprietor will take the land subject to any overriding interests.

-Paragraph 1: Legal leases granted for a term of SEVEN years or LESS: Legal leases for more than seven years are registrable dispositions. If they’re registered, they will be binding on a new freehold owner. Legal leases which are LESS than this do not have to be substantively registered and will bind a new freehold owner as overriding interests. There are too many short leases to make registration a practical proposition and it’s unreasonable to expect those who occupy premises under short leases, especially residential short leases, to register them. Equitable leases don’t apply here.

-Paragraph 2: Equitable interests held by people in actual occupation of the land, subiect to exceptions: Most controversial category. Scope of the basic provision must be considered first. It has the effect of, amongst other things, enforcing equitable trust interests not overreached, against purchasers and lenders. Law Commission explained why it retained this class. They felt it was unreasonable to expect people whose interests had arisen informally (i.e. implied trusts), to take formal steps to protect those interests. Also, when people occupy land, they tend not to appreciate their position may be precarious, and don’t think about if they need protect their position. Overriding interests based on actual occupation is therefore designed to protect people who do not realise that they are in a vulnerable position. In order for an interest to be overriding within Sched 3 para 2 there must be an interest in land and the holder must be in actual occupation of the land to which the interest relates. Must be a proprietary interest in land (i.e. occupying the land) rather than personal right (equitable interest/lease or right to purchase). In Link Lending v Bustard, it was said “the courts are reluctant to lay down or suggest a single test for determining actual occupation.” There are some factors however; degree of permanence and continuity of presence of the person concerned, the intentions/wishes of that person, length of absence from the property and the reason for it & nature of the property and personal circumstances of the person.

-Paragraph 3: Implied legal easements or profits à prendre, if conditions are met:

Question 17

Actual Occupation Key Cases

Answer 17

-Link Lending v Bustard: B was detained in a mental health hospital and was unable to live at home. The court held that B was in actual occupation. Her belongings remained; her absence was involuntary and her regular visits demonstrated a continuing intention to return.

-Williams & Glyn’s Bank v Boland: Actual means its plain meaning, and involves a physical presence

-Abbey National v Cann: Actual occupation is to be given its plain meaning, and involves a degree of physical presence

-Thompson v Foy: The person claiming the interest must be in actual occupation at the time of the transfer deed & potentially registration also

-Chhokar v Chhokar: Actual occupation is not defeated by temporary absences such as holidays, hospital stays or business trips

-Stockholm Finance Ltd v Garden
Holdings Inc: There will be a point at which a prolonged absence means there is no actual occupation (ex. long periods of time in a second home)

Question 18

Exceptions to Actual Occupation

Answer 18

-Sched 3, 2(b) (LRA 2002) sets out one of two situations in which there will be no overriding interest even though the holder is in actual occupation.

-Firstly, when a person to whom inquiry was made (holder of the interest) failed to disclose the right when he could reasonably have been expected to do so

-Secondly, when an interest belongs to a person whose occupation would not have been obvious on inspection and of which the person to whom the disposition is made does not have actual knowledge at the time

Question 19

Implied Legal Easements

Answer 19

Sched 3, Para 3 states that an implied legal easement will be binding as an overriding interest if:

-The new owner knew about it OR
-The new owner did not know about it, but it was obvious upon inspection OR
-It has been exercised within the 12 months immediately before the disposition

-Therefore, most implied legal easements, even those which are not obvious, will be overriding interests as it is highly likely that they will have been exercised recently. Ex. an easement through an underground drain that isn’t visible will be binding if it has been used recently. This is good news for the holder of the easement but not for the new owner of the burdened land, who will be bound by it

Question 20

Unregistered Land

Answer 20

-Title information is contained on old paprr deeds and has this information: the history of the land, who has owned the land, how the beneficial title is held where there are co-owners and what rights benefit and/or burden the land. It is held by the owner of the property, not an authority

-The seller must make a copy of the relevant documents called am epitome of title, and show when selling (i.e. deducing title)

-The seller hands the originals over to the buyer, who needs to send these original documents to the Land Registry so the land and the buyer’s ownership can be registered for the first time

Question 21

Enforcement In Unregistered Land

Answer 21

-Purchasers will need to ascertain if there are any third-party proprietary rights which could bind them as the new owner of the unregistered land

-In order to do this a purchaser needs to identify whether any legal or equitable rights exist. There is no central register like in registered land so extensive searches must be conducted

-There are different rules depending on the nature of a right and the year it was created

Question 22

Legal Interests: Pre 1926

Answer 22

-Prior to 1926, the principle of whether a right would be enforceable against a third party depended upon whether the interest was legal or equitable in nature

-Before 1926, where a person held a legal interest over land, they would be able to enforce that interest against anyone who came to own or occupy that land. This would be the case even if that new owner did not know, or should not have known, about the interest prior to the purchase

-“Legal rights bind the whole world”
(Mercer v Liverpool, St Helen’s & South Lancs Railway Co)

-Unlike legal interests, before 1926, equitable interests were not automatically binding on a successor in title to the land affected

-Equity would only intervene and enforce an interest against a successor to land, where the successor’s conscience had been affected in some way, making it just for them to take the land subject to that interest (i.e. when the successor was aware of the inte

-BUT where the successor was a bona fide purchaser for value of a legal estate without notice of the prior interest (Equity’s Darling), the land would come free of that interest. This meant extensive searching would be required for a full profile of the land

Question 23

Post 1926 Registration

Answer 23

-The solution was registration. If an interest is registered, then a buyer can readily discover it, and the registration system assures the interest holder their interest cannot be defeated by a buyer

-The solution of enforcement was found in a mixture of pre-1926 rules of enforcement and partial registration. Since some of the old doctrines from pre-1926 were going to be relied upon, the distinction between legal and equitable interests remains more significant, unlike in registered land

-The majority of titles to land are registered (helped by the LRA 2002) but we still cannot leave the temporary system. However, registration into the system is now compulsory and has been since 1990 and failure to register the land means that legal title (the legal ownership) will revert to the seller after 2 months.

Question 24

Post 1926 Legal and Equitable Rights

Answer 24

Legal rights: The position stayed the same as pre-1926. A legal right, such as an easement created by deed, will continue to bind the whole world. There is no need for the legal right to be registered or any notice to be served upon anyone. There is an exception to this which is a ‘puisne’ mortgage (a second legal mortgage; a second mortgage holder must protect their interest by the entry of a land charge) which must be registered as a Land Charge

-Equitable rights: The majority of equitable interests created post 1926 will need to be protected by way of a Land Charge, under the Land Charges Act (LCA 1972). Not all interests can be protected like this.

-Doctrine of Notice STILL applies for: equitable easements and restrictive covenants created before 1926 & equitable interests in a trust of land not overreached

Question 25

Land Charges

Answer 25

-Since 1926, the majority of equitable interests should be protected as a Land Charge in order to ensure they are binding on a purchaser for value

-The Land Charge is entered against the NAME of the landowner at the time the right is granted/created. Failure to protect an interest against the correct name and a clear search made against the full name(s) as spelt in the title deeds, means the interest is unenforceable and will not therefore be binding

-Interests that can be protected by entry into the Land Charges Register (under LCA 1972) include: Class C(I): puisne mortgage (ie second or subsequent legal mortgage), Class C(IV): estate contract (eg a contract to buy land, an option, or a contract to
have a lease granted over land), Class D(Il): restrictive covenant created after 1926, Class D(III): equitable easement created after 1926 & Class F: spouse’s matrimonial right of occupation (this is not an interest, it’s a statutory right, for a non-owning spouse, to occupy the family home under the Family Law Act 1996)

-If an equitable interest should be protected by a Land Charge, because it is listed above, but has not been, it will not be binding on a purchaser, even if the purchaser has actual knowledge of the interest. It would still be binding on someone who is gifted

Question 26

Effect of Non-Entry of a Land Charge (S4, LCA 1972)

Answer 26

-Non-protection of an interest will make it void against a purchaser of the land, but not against someone who is gifted or who inherits the land

-Key Case: Midland Bank Trust Co Ltd v Green; The state of the purchaser’s knowledge is irrelevant

-The land charge is entered against the
name of the landowner (should be their full name) at the time the right is granted/created (S3)1)). Should the land charge be entered against an incorrect name (ex. an omission of one of the estate owner’s names which appears in the title deeds), the protection is a nullity

-Key Case: Diligent Finance Co Ltd v Alleyne; A clear search against the full name allowed a later mortgagee to take free from the spouse’s right of occupation as the Class F land charge was void

Question 27

Searching for a Land Charge

Answer 27

-To discover the existence of a registered land charge, a search must be made of the register against the full names of the estate owners) as spelt in the title deeds

-In view of the provisions of LPA 1925, S198(1) (entry of a land charge is notice to all persons for all purposes), a search should be made, wherever possible, against all previous estate owners for their period of ownership (or at least to 1 January 1926)

Question 28

Doctrine of Notice

Answer 28

-The enforceability of certain equitable interests in unregistered land depends on the doctrine of notice

-Equitable easements and restrictive covenants created before 1926 (these are very rare)

-Equitable interests in a trust of land that have not been overreached and therefore the interest has not transferred from the land to the purchase money

-Under the doctrine of notice, an equitable interest over the land is binding on anyone except ‘Equity’s Darling’. ‘Equity’s Darling’ is a ‘bona fide purchaser for value of a legal estate without notice’. Without notice - means without any of the three kinds of notice (actual, constructive or imputed)

-Actual notice means they actually know. Imputed means the buyer’s agent, for example the solicitor, received the notice. Constructive means if they fail to pursue a line of enquiry which ought reasonably to have been made (proper investigation of the title deeds & the land)

-When checking the land, the purchaser must take care to see who has use of the land. For example, is there any evidence of worn tracks which may suggest a right of way?

-The purchaser should also ensure that that it makes enquiry of all the occupiers of the land. If the purchaser discovers that they are not dealing with the legal owner, they should enquire of that person what interest, if any, they hold in the land

-Hunt v Luck: Presence of a tenant on the land placed the purchaser on constructive notice of the tenant’s leasehold interest

-Kingsnorth Finance Co Ltd v Tizard: A loan was agreed and paid to Mr Tizard alone, therefore not overreaching Mrs Tizard’s equitable interest. Mr Tizard later emigrated to America with the boy twin and defaulted on the loan. The court had to consider if Mrs Tizard’s equitable interest in the property under the trust was binding on the plaintiff finance company. Was the finance company Equity’s Darling and therefore not subject to Mrs Tizard’s equitable interest? HELD: The finance company had imputed notice of Mrs Tizard’s equitable interest through the constructive notice of its surveyor. The surveyor should’ve made more inquiries. The finance company were therefore bound by the equitable interest.

-Equity’s Darling: The full rule is that an equitable interest is void against such a purchaser or someone claiming through them. It follows that once an equitable interest becomes void for want of notice, it cannot be revived so as to bind a subsequent buyer.

Wilkes v Spooner: A restrictive covenant not to open a butcher’s shop was void for lack of notice. It was not binding on the defendant, a subsequent owner, even though he had notice of the previous covenant. His predecessor in title was a bona fide purchaser for value without notice, who was not bound by the covenant, and the covenant did not revive when the land passed to the defendant

Question 29

Problems with the Doctrine of Notice

Answer 29

-The buyer would have to satisfy all the requirements of being a bona fide purchaser for value of a legal estate without notice in order to take free from the interest

-The buyer would need to carry out extensive investigations of both the property and associated documents to find out about existing equitable interests, otherwise it might find itself bound

-This is time consuming, expensive and may not guarantee discovery of those interests which should be discovered

-The interest is fragile because it could be destroyed forever if a bona fide purchaser for value of a legal estate without notice purchased the land. This would be through no fault of the owner of the interest and in circumstances where the owner could not have done anything to protect it.